THE GIST
The ground is shaking under some of the most important beer brands for a trio of California’s largest brewers. After holding dominant positions for years by growing volumes and brand affinity, multiple flagships and their line extensions have lost footing and sales for Sierra Nevada Brewing Company, Firestone Walker Brewing Company, and 21st Amendment Brewery.
That three of California’s longest standing breweries are experiencing declines in their top-selling brands—even after reformulations, line extensions, and distribution expansions—speaks to how few levers brewers have left to pull to jumpstart growth for flagships within a largely tough craft beer market. And it’s a pile-on amidst problems that face Anchor Brewing and its flagship Steam Beer, already a major California brand on the downswing.
Sierra Nevada’s Hazy Little Thing—and later its four spin offs, Big Little Thing Imperial IPA, Wild Little Thing Slightly Sour Ale, Juicy Little Thing Hazy IPA, and Sunny Little Thing Citrus Wheat Ale—have been the driving force for that brewery since early 2018.
Hazy Little Thing alone outsold Sierra Nevada’s iconic Pale Ale by national chain retail volume in the latest 52-week period ending June 18. But, its national sales volume is down -2% during the same period, although that’s still better than the craft category (-6.7%).
As a family of brands, the collection of "Little Things" beers are +5.2%, in those 52 weeks, but that growth is driven by the debut of Juicy Little Thing Hazy IPA and a full rollout of their Little Things Party Pack variety pack.
In order to keep momentum behind these brands, the brewery has shifted focus between current lineups of Little Things beers and rotating in new ones, which has helped keep sales from stagnating. Along with the Juicy brand, labels for Dank Little Thing and Cosmic Little Thing Double Hazy IPA hint at further extensions. Tropical Little Thing and Crisp Little Thing have most recently been introduced.
Meanwhile, sales of Firestone Walker’s 805 Blonde Ale are in their third year of declines in trackable chain retail. By releasing another version in 2021—805 Cerveza—the brewery minimized those losses, but momentum has slowed for both beers’ chain retail sales in the latest 52 weeks: Original 805 is down -13% and Cerveza is down -4%. Still, it’s only distributed to 16 states, and the brewery says further 805 iterations are a possibility.
21st Amendment’s Brew Free or Die IPA family has seen the steepest declines. In 2019, Brew Free or Die IPA and its Blood Orange flavor each sold more than 100,000 cases nationally in chain retail; this year, the total Brew Free or Die family is on pace to sell short of 75,000 cases, even with the addition of two new variants, Hazy and Tropical.
The struggles of these brands isn’t unique in the context of craft overall—sustaining growth is now something of an outlier—and relying on line extensions is no silver bullet. But shortcomings nationally are even reflected in these breweries’ home state of California, where Firestone Walker (-15.6%) and 21st Amendment (-29.1%) saw volume declines in grocery, convenience, and other chain stores worse than craft (-9.8%) while Sierra Nevada (-4.8%) performed better, though still in the red.
WHY IT MATTERS
California is the U.S.’s second-largest beer market by volume after barely ceding the top spot to Texas last year, according to estimates from the Beer Institute trade group. Through April of this year, just 500,000 cases separate the two, making California breweries an important microcosm of the beer industry writ large. The age of a particular flagship beer and the pace of its declines are the two primary factors determining whether these three California breweries will continue to invest in it.
At just five years old, Sierra Nevada’s Little Thing family remains one of the top-selling craft beer brands in the country. It’s experiencing slower declines than the category as a whole, so while Sierra Nevada is investing heavily in beyond beer products, including a hard kombucha, hop-infused water, and non-alcoholic IPA, it wouldn’t make sense to stray from its Little Things lineup any time soon. (Sierra Nevada did not respond to a request for an interview for this story.)
For 21st Amendment, double-digit volume losses for Brew Free or Die IPA, which has been a part of the brewery’s lineup since it opened in 2000, have caused co-founder and chief operating officer Nico Freccia to think more existentially, reconsidering the role and longevity of flagship beers. Rather than spending money and human resources to try to bring Brew Free or Die or Hell or High Watermelon—the brewery’s second best-selling beer—back to their mid-2010s sales peaks, the brewery is instead diversifying its portfolio and its revenue streams. Freccia says Brew Free or Die has “stabilized,” but is unlikely to grow back to the volume it did in its heyday. In 2022, the IPA sold almost five times less volume than it did 2018 in trackable chain retail in California.
At 21st Amendment, Freccia is candid that devoting money and attention to severely slumping flagships may not be the most efficient path forward.
“The prevailing wisdom and thinking always would have been: Yes, put muscle behind your flagship and return it to growth. But I don’t know if that is going to work anymore,” he says.
Firestone Walker remains committed to 805 and 805 Cerveza, which chief marketing officer Dustin Hinz describes as “defining the brewery” because of their sales volumes—the pair account for 75% of the brewery’s chain retail sales as tracked by market research company Circana. He says both are still young brands, with 805 debuting in 2013 and Cerveza launching in 2021. While the 805 brand may have dips in sales on 12- or 18-month periods, he says, success should be measured in terms of years and even decades.
“As consumers today and brand managers, we get really impatient,” Hinz says. “But when you think about some of the world’s greatest brands, they’re not overnight successes. They take decades to really build.”
He mentions White Claw, which didn’t achieve its dominant status in the hard seltzer market until three years after its launch, or Twisted Tea, which quietly for more than 15 years enjoyed a cult following until exploding onto the national scene. He says that 805 still has “a long runway” through a combination of geographic expansion to new states and potential extensions beyond beverage into adjacent lifestyle categories.
But the necessity to explore these new avenues shows the necessity to replace volume as the core 805 brand faces challenges. It’s just doing it differently than peers. 21st Amendment tried fruited versions of Brew Free or Die to save the IPA; Firestone Walker is shifting the brand into entirely different spaces. The future of 805 can’t rest solely on its Blonde Ale, so the company is already exploring new flavors and iterations. Hinz indicates 805 is about “not just a beer,” but a full-fledged lifestyle brand. This includes documentaries featuring surfers, bikers, and boxers, collaborations with fashion brands, and non-beer products.
805 remains the top-selling craft beer brand in California chain retail sales, but those packaged sales maxed out in 2020. Draft sales have been stronger, with 805’s rate of draft sales +85% better than that of craft beer overall, according to data from BeerBoard, a hospitality technology company. Despite losing ground for 805 in grocery stores, Firestone Walker still believes that the beer can penetrate deeper in the California market. The brand has existed for a decade, so it’s going to need to work hard to convert new drinkers. Hinz mentions media investments, shopper and retail marketing efforts, and external partnerships with groups like the World Surf League as tools.
It’s undeniable that maintaining—let alone growing—flagship brands given broader industry struggles takes discipline and resources. Across the country, flagship brands saw a momentary 2020 boost thanks to COVID-related shopping behaviors that pushed consumers toward known beer brands in chain retail. But since then, many flagships have faltered despite breweries’ investment in them. Earlier this year, Boston Beer Co. and New Belgium Brewing reformulated Boston Lager and Fat Tire, respectively. This followed years of declines for the brands: In the first quarter of 2023, both beers sold roughly half the volume they did in the same time period five years prior in chain grocery, convenience, and big box stores. Yet the reformulations, at least so far, have yet to boost sales in a meaningful way. Boston Lager is -12.6% in the most recent 52-week chain retail sales period; Fat Tire is -18.1%.
Introducing spinoffs or variants to make up for volume declines of an original flagship works, up to a point. Sierra Nevada’s Little Thing line keeps introducing expansions, having spawned several year-round variants, a variety pack, and a limited-edition Tropical Little Thing Hazy IPA. These have helped to offset dips for the original Hazy Little Thing:
In California chain retail, for example, sales of Hazy Little Thing and Wild Little Thing (the only two Little Things brands that showed declines) dropped by a combined 60,851 cases for the 52-week period ending June 18.
Meanwhile, Big Little Thing, Sunny Little Thing, the Little Thing variety pack added a combined 61,298 cases during the same time period—a near-even replacement.
While Hazy Little Thing’s draft volume in California was flat for the 52-week period ending June 23 versus the 52-week period prior, Sunny Little Thing’s draft volume in the state has increased +350% during that time.
Firestone Walker has tried this with 805 and 805 Cerveza, a Lager with lime counterpart to 805 Blonde Ale. It’s also expanded the lineup for its number-three seller, Mind Haze IPA:
Mind Haze had its peak sales year in 2020, aided by those COVID-era shopping shifts, selling 417,993 cases nationally. It finished 2022 selling 70% of that volume in chain retail.
Losses were partially stanched by the launch of Mind Haze Double IPA in 2021 and Tropical Hazy Mixed Pack in 2022. Even taken together, though, those three products are on pace to fall short of what Mind Haze alone sold in 2021.
In eras past, it might have taken a decade to build out these line extensions, but the boom-and-bust nature of today’s beer innovations has compressed that timeline. A January 2020 Sightlines+ analysis found that three years is roughly the timeline needed to determine whether a brand has staying power. Extensions can provide fresh legs to a slowing brand family, but ultimately, they’re still reliant on the strength of the core flagship upon which they’re built.
The flip side to continuing to push a flagship is to release new beers, hoping for the next hit. But new product launches are far from a sure bet. Citing data from NielsenIQ, Bump Williams Consulting this spring described new product launches as less “efficient” than in years past: New brands accounted for 12.6% share of total beer brands in the latest year period ending Feb. 25, but only 1.2% of total beer dollar sales.
Hinz says Firestone Walker is trying to stay vigilant and purposeful in the new beers it releases. Its Propagator series—small-batch releases born out of its research and development brewhouse—is a place for brewers’ experimentation and boundary-pushing, but when it comes to scaled-up, national priorities, being candid about return on investment is critical. It’s more expensive to launch a brand than it is to maintain an already proven one. Often, Hinz says, resources could be better spent taking a flagship to new markets and customers than in launching a brand-new, unproven product. Packaging, ingredients, and marketing plans are already in place for an established brand versus a new one, lightening the logistical and financial lift.
“Having the discipline to not chase or step over millions of cases to pick up hundreds of thousands of cases requires a tremendous amount of discipline,” Hinz says. Firestone Walker has internally redefined “innovation” to mean not just new product development, but new formats and packaging for existing beers, new marketing strategies, and other considerations to expand the reach of existing brands. “It’s about: How do we drive more core business and make that business stickier?”
At 21st Amendment, focus has expanded beyond the core beer business. Freccia is candid about how different this reality is from what he and his business partners forecasted nine years ago.
21st Amendment built its current facility with space to produce 300,000 barrels of beer annually; last year, the brewery sold 62,843 BBLs of beer, according to figures reported by the Brewers Association.
To fill the excess space, it has invested in co-manufacturing capabilities by purchasing a tunnel pasteurizer and other equipment to produce ready-to-drink cocktails, non-alcoholic beers, and energy drinks for other companies.
It’s also in the process of launching two THC beverages under the name Hella High Watermelon in partnership with a California cannabis company.
“I hope in 2025, beer is a passion project of ours that we don’t have to rely on to pay the rent,” Freccia says. “Do I think the cores will still be the cores? I hope they still have good volume but it will be fun to get back to what we were doing between 2010 and 2015, which was basically making stuff we thought was interesting and figuring there would be a market for it.”
This beyond-beer perspective would have been unimaginable when 21st Amendment was founded in 2000, or even 2015. But it’s indicative of just how quickly things have shifted for businesses built on the classic model of a flagship beer and a strong seasonal portfolio. Sierra Nevada was built similarly, but it has similarly invested in beyond beer with its Can Do facility, an 85,000-square foot space that, when it comes online this summer, will help the brewery double the size of its non-beer portfolio within five years. It will also provide contract brewing for other brands.
If it sounds like breweries are walking a delicate tightrope between sustaining flagship brands and investing in new products as a hedge, that’s because they are. With the craft beer category down overall, breweries need to be more intentional and thoughtful than ever about which brands—new or old—receive their attention and resources.
“Ten years ago, literally anything you made would sell. … You couldn’t keep up with demand. I think it lulled us old-schoolers into this false sense of security like we can do no wrong,” Freccia says. “Now everybody’s like, ‘What’s going on?’ We’re trying to keep beer SKUs limited in terms of new stuff, because you want whatever you do to pack a punch.”
Words by Kate Bernot